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Strategy in Marketing
Professor Lawrence Feick
University of Pittsburgh
Outline
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What is marketing strategy?
Framework for marketing strategy
External analysis: environmental scanning
Internal analysis: core skills of the firm
SWOT: matching the external and internal
Portfolio models
Marketing strategy
• Answers basic questions:
– to whom will we sell?
– what will we sell, how will we sell it?
• Focus on:
– target market selection
– marketing mix design
Marketing strategy formulation
• External analysis (looking outside the firm)
– environmental scanning
– environmental management
– identifying opportunities and threats
• Internal analysis (looking inside the firm)
– mission and objectives
– key skills, resources of the firm
– identifying strengths and weaknesses
External analysis:
The key environments
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Socio-cultural environment
Economic environment
Technological environment
Political-legal environment
Competitive environment
External analysis:
The socio-cultural environment
• Demographics
– age, education, marital status, race, etc.
• Culture
– US culture, subcultures, foreign cultures
– pop culture, style, fashion, conventional
wisdom
– ideas, movements, causes
• How is this environment changing?
Life expectancy at birth by sex,
US by year
Year
Men
Women
1900
48
50
1925
55
58
1950
65
72
1975
68
75
2000
72
79
Racial (ethnic) characteristics of
the US, percentages by year
Ethnicity
1990
2005
White (Eur)
76
68
Black (AA)
12
13
Hispanic
9
14
Asian
3
5
Percent distribution of origin of
US naturalized citizens by year
Origin
1961-70
1991-94
Europe
62
12
N. America
21
27
Asia
13
49
S. America
2
8
Other
2
4
Source: US INS
External analysis:
The economic environment
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GDP and business cycles
Personal income
Inflation
Unemployment
External analysis:
The technological environment
• Creation of substitutes for the product
category (e.g., marketing myopia examples)
• Changes in the product or product usage
• Changes in the production, service, or
support process
• Changes in distribution channels
• Changes in promotion, media
External analysis:
The political-legal environment
• Government laws and regulations
– Maintaining a competitive market
– Protecting consumers
• Industry self-regulation
• Litigation
External analysis:
The competitive environment
• Who is our competitor?
– brand-level competition
– product category-level competition
– want-level competition
• Open markets and increased competition
– global connections
– emphasis on exports
– virtual marketing
External analysis: recap
Economic
Environment
Socio-cultural
Environment
Technological
Environment
Firms,
Consumers,
Competitors,
and Products
Political-legal
Environment
Competitive
Environment
External analysis: recap
• Five external environments change
continually
• Changes create opportunities and challenges
in new and existing markets
• Marketers’ key jobs:
– environmental scanning, forecasting, adaptation
– environmental management (if possible)
Internal analysis
• Motivation: how does the firm choose from
among all of the opportunities in the
environment?
• Examples
– Microsoft
– Federal Express
Internal analysis:
Mission
• The self-defined description of the business
the firm is in; why the firm exists
• Usually includes mention of
– customer groups served
– customer needs met
– technology employed
• Constrains marketing strategy choices
Mission statement example
• Intel: Do a great job for our customers,
employees, and stockholders by being the
preeminent building block supplier to the
computing industry.
Internal analysis:
Organizational objectives
• Define sought after benchmarks
• Usually specific about time and quantity
• Often involve sales, profits, numbers of
customers, customer satisfaction, etc. or
hoped for changes in these
• Constrains marketing strategy choices
Internal analysis:
Strengths and weaknesses
• Assessment of skills, resources,
competencies of the firm
• What do we do exceptionally well, what not
so well?
• What assets (e.g., patents, image, brands,
people) do we have that give us an
advantage?
• How do we compare to competition on
these?
SWOT
• Combining the results of internal analysis
(SW) with external (OT)
• Build on strengths to take advantage of
environmental changes
• Manage weakness that are made greater by
environmental changes
Recap: marketing strategy
• Outcome of SWOT analysis:
– a focus on who: which target markets?
– a focus on how: what marketing mix will move
them?
• Key to success: consistency
– with the target market and mix
– among elements of the mix
Aside: Portfolio models
• Purpose: assess each of the firms businesses
using internal and external criteria
• Two examples:
– Boston Consulting Group Growth/Share Matrix
– GE Business Screen
BCG Growth/Share Matrix
Fast
Growth
10%
Slow
Growth
High Relative Share
1.0
Low Relative Share
BCG Growth/Share Matrix
Fast
Growth
C
10%
Slow
Growth
A
High Relative Share
B
1.0
Low Relative Share
GE Business Screen
High
Green
Yellow
Medium
Red
Low
Strong
Average
Business Strength
Weak
Portfolio models: Summary
• Assumptions
• Uses
• Limitations